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Board of Trustees On Behalf of Tile Setters v. Shane Alexander Custom Tile and Stone, Inc.

United States District Court, E.D. California

May 1, 2015

BOARD OF TRUSTEES ON BEHALF OF THE TILE SETTERS AND FINISHERS OF NORTHERN CALIFORNIA DEFINED BENEFIT PENSION TRUST AND THE TILE SETTERS AND FINISHERS OF NORTHERN CALIFORNIA HEALTH AND WELFARE TRUST Plaintiff,
v.
SHANE ALEXANDER CUSTOM TILE AND STONE, INC. Defendant.

ORDER AND FINDINGS AND RECOMMENDATIONS

KENDALL J. NEWMAN, Magistrate Judge.

INTRODUCTION

Presently pending before the court is a motion for default judgment filed against defendant Shane Alexander Custom Tile and Stone, Inc. ("defendant") by plaintiff Board of Trustees on behalf of the Tile Setters and Finishers of Northern California Defined Benefit Pension Trust ("Pension Trust") and the Tile Setters and Finishers of Northern California Health and Welfare Trust ("Health and Welfare Trust") (collectively, "plaintiff"). (ECF No. 7.) Defendant failed to file an opposition to the motion in accordance with Local Rule 230(c). At the April 30, 2015 hearing on the motion, attorney Teague Paterson appeared telephonically on behalf of plaintiff, and no appearance was made on behalf of defendant.

After carefully considering the briefing and other documentation in support of the motion, the oral argument at the hearing, the court's record, and the applicable law, the court recommends that the motion be GRANTED IN PART on the terms outlined below.

BACKGROUND

The background facts are taken from the operative original complaint, unless otherwise noted. (See Complaint, ECF No. 1 ["Compl."].)

Plaintiff is the plan sponsor and administrator of two ERISA[1]-regulated multiemployer benefit plans, the Pension Trust and the Health and Welfare Trust. (Compl. ¶ 4.) The Pension Trust was created and maintained for the purpose of collecting and receiving contributions and providing pension benefits to eligible participants in accordance with an Agreement and Declaration of Trust ("Pension Trust Agreement") and collective bargaining agreements between the Tile Setters and Finishers Union of Northern California ("Union") and employers engaged in activities affecting commerce and their trade association, The Associated Tile Contractors of Northern California ("Association"). (Compl. ¶¶ 5, 8, Ex. A; Declaration of Teague P. Paterson, ECF No. 9 ["Paterson Decl."] ¶ 35, Ex. 8.) Similarly, the Health and Welfare Trust was created and maintained for the purpose of collecting and receiving contributions and providing health and welfare benefits to eligible participants in accordance with an Agreement and Declaration of Trust ("Health and Welfare Trust Agreement") and the collective bargaining agreements between the Union and the Association. (Compl. ¶¶ 6, 23, Ex. G; Paterson Decl. ¶ 35, Ex. 8.) Defendant is an employer located in Rocklin, California, that previously participated in the Pension Trust and Health and Welfare Trust on behalf of its employees. (Compl. ¶ 7.) Defendant also joined the Association around August of 2009. (Compl. ¶¶ 5, 10, Ex. B.)

Defendant participated in the Pension Trust since at least January of 2004, submitting monthly contributions on behalf of covered employees, with such employees accruing benefits under the Pension Trust's pension plan. (Compl. ¶¶ 9, 11.) On April 29, 2008, in accordance with ERISA, plaintiff adopted a Withdrawal Liability Policy, which provides for the assessment of employer withdrawal liability on contributing employers that withdraw from the Pension Trust. (Compl. ¶ 12, Ex. C.) Thereafter, around July 1, 2013, defendant ceased making contributions to the Pension Trust on behalf of its covered employees, which constituted a withdrawal from the Pension Trust for purposes of ERISA and the Withdrawal Liability Policy. (Compl. ¶¶ 13-14.) Plaintiff then commissioned from the plan's actuary an assessment of defendant's withdrawal liability, which amounted to $128, 465.00 in principal. (Compl. ¶¶ 15, 41, Ex. D.) That assessment and a demand for payment of such employer withdrawal liability were served on defendant no later than December 17, 2013. (Compl. ¶¶ 16-18.) Along with the demand for payment, and in accordance with the Withdrawal Liability Policy and ERISA, plaintiff offered a payment schedule, with the first installment due within 60 days. (Compl. ¶ 18, Ex. E, see also Ex. C at Section V.) However, defendant subsequently failed to make any installment payment; nor did defendant respond to, or request review of, that assessment. (Compl. ¶ 19.) Only on April 15, 2014, after plaintiff had sent another payment demand on April 2, 2014, defendant indicated that it did not consider itself bound by the Pension Trust's withdrawal liability provisions. (Compl. ¶¶ 20-21, Ex. F.)

Defendant also participated in the Health and Welfare Trust since at least 2004, submitting monthly contributions on behalf of covered employees, with such employees receiving health benefits pursuant to the Health and Welfare Trust. (Compl. ¶¶ 24, 26.) The Health and Welfare Trust Agreement and the applicable collective bargaining agreement required prompt payment of monthly contributions on or before the 10th day of the month following the month in which the employee's work was performed, and specified that liquidated damages would be assessed for failure to timely pay the required contributions. (Compl. ¶¶ 25, 28, Ex. G at §§ 7.01, 7.07; Paterson Decl. Ex. 8 at Article XII.) Between May 2010 and April 2013, defendant untimely remitted contributions to the Health and Welfare Trust, and plaintiff consequently assessed liquidated damages for such untimely contributions in accordance with the Health and Welfare Trust Agreement. (Compl. ¶¶ 27-28, Exs. H, I.) According to plaintiff, defendant paid a portion, but not all, of the liquidated damages owed, and defendant ceased participating in the Health and Welfare Trust around June 30, 2013. (Compl. ¶¶ 7, 29.) On March 17, 2014, plaintiff sent a demand for payment, which indicated that defendant still owed a principal amount of $14, 174.37 in liquidated damages, but defendant did not respond to that demand. (Compl. ¶¶ 29-34, Exs. H, I.)

Plaintiff commenced this action on November 21, 2014. In its complaint, plaintiff asserts causes of action under ERISA and the trust documents for: (1) collection of employer withdrawal liability related to the Pension Trust, as well as associated interest and liquidated damages; and (2) collection of liquidated damages for late contributions to the Health and Welfare Trust, as well as interest. (Compl. ¶¶ 35-51 & Prayer.) The complaint also seeks attorneys' fees and costs incurred in attempting to recover the above-mentioned relief. (Id.)

After plaintiff effectuated service of process on defendant on December 4, 2014 (ECF No. 4), defendant failed to respond to the complaint. As such, upon plaintiff's request, the Clerk of Court entered defendant's default on January 21, 2015. (ECF Nos. 5-6.) The instant motion for default judgment followed. (ECF No. 7.) The motion was served on defendant by mail. (Id.)

LEGAL STANDARD

Pursuant to Federal Rule of Civil Procedure 55, default may be entered against a party against whom a judgment for affirmative relief is sought who fails to plead or otherwise defend against the action. See Fed.R.Civ.P. 55(a). However, "[a] defendant's default does not automatically entitle the plaintiff to a court-ordered judgment." PepsiCo, Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172, 1174 (C.D. Cal. 2002) (citing Draper v. Coombs, 792 F.2d 915, 924-25 (9th Cir. 1986)). Instead, the decision to grant or deny an application for default judgment lies within the district court's sound discretion. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). In making this determination, the court considers the following factors:

(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action[, ] (5) the possibility of a dispute concerning material facts[, ] (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.

Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).

As a general rule, once default is entered, well-pleaded factual allegations in the operative complaint are taken as true, except for those allegations relating to damages. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (per curiam) (citing Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977) (per curiam)); accord Fair Housing of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002). In addition, although well-pled allegations in the complaint are admitted by a defendant's failure to respond, "necessary facts not contained in the pleadings, and claims which are legally insufficient, are not established by default." Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (citing Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978)); accord DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th Cir. 2007) (stating that a defendant does not admit facts that are not well-pled or ...


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